CORAM

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Tijjani Abubakar Justice of the Supreme Court of Nigeria

Chidi Nwaoma Uwa Justice of the Supreme Court of Nigeria

Haruna Simon Tsammani Justice of the Supreme Court of Nigeria

Habeeb Adewale Olumuyiwa Abiru Justice of the Supreme Court of Nigeria

Helen Moronkeji Ogunwumiju Justice of the Supreme Court of Nigeria

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PARTIES

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STANDARD ALLIANCE INSURANCE COMPANY LIMITED

APPELLANTS 

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FIRST CITY MONUMENT BANK LIMITED

RESPONDENTS 

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AREA(S) OF LAW

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CONSTITUTIONAL LAW, COURT JURISDICTION, BANKING LAW, CONTRACT LAW, FEDERAL HIGH COURT JURISDICTION, STATE HIGH COURT JURISDICTION, GUARANTEE BONDS, CIVIL PROCEDURE, THIRD PARTY PROCEEDINGS, SIMPLE CONTRACT, PRELIMINARY OBJECTIONS

 

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SUMMARY OF FACTS

First City Monument Bank Limited (the Respondent) commenced an action in the High Court of Lagos State against Standard Alliance Insurance Company Limited (the Appellant) claiming N149,737,748.69 being the outstanding part of a N150,000,000.00 Credit Guarantee Bond issued by the Appellant in favor of the Respondent, plus interest at 23% per annum from 1st March 2001.

The facts were that the Respondent had granted Fort Knox Investment Limited an overdraft facility of N150 million, and the Appellant executed a Credit Guarantee Bond to guarantee this facility. The bond was for a tenure of three months, expiring on 3rd March 2001. The Appellant’s case was that the bond only covered eight specific purchase contracts for cocoa beans export, which had been fully performed, and that the Respondent’s claims arose from three new contracts made in January 2001 that were not covered by the original bond.

The Appellant filed a preliminary objection on 14th March 2004, arguing that the High Court of Lagos State lacked jurisdiction because the matter fell within the exclusive jurisdiction of the Federal High Court under Section 251(1)(d) of the 1999 Constitution, as it related to banking matters. The trial court (per Dada J.) upheld the preliminary objection and struck out the action for want of jurisdiction on 23rd April 2004.

The Respondent appealed to the Court of Appeal, which allowed the appeal on 15th January 2007 and remitted the case to the High Court of Lagos State for hearing on the merits. The Court of Appeal found that although there was no banker/customer relationship between the parties, the subsequent joinder of Fort Knox Investment Limited (the borrower) as a third party changed the character of the action and brought it within the proviso to Section 251(1)(d) of the Constitution.

Dissatisfied with the Court of Appeal’s decision, the Appellant appealed to the Supreme Court.

 

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HELD

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1. The appeal was dismissed and found to lack merit.

2. The Supreme Court held that the Court of Appeal’s decision was correct, though the reasons given were wrong.

3. The Court held that the action was predicated on a simple contract of guarantee, and therefore fell within the jurisdiction of the State High Court rather than the Federal High Court.

4. The Court held that the joinder of Fort Knox Investment Limited as a third party was irrelevant to jurisdictional determination, as jurisdiction is determined by the plaintiff’s claims, not by subsequent procedural steps.

5. The judgment of the Court of Appeal delivered on 15th January 2007 was affirmed.

6. The case file was remitted to the Chief Judge of Lagos State for assignment to a Judge for expeditious determination.

7. The Respondent was awarded costs of N1,000,000.00.

 

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ISSUES

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Whether the Court of Appeal was right when it held that the Lagos High Court had jurisdiction to entertain the substantive matter at the trial Court?

 

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RATIONES DECIDENDI

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JURISDICTION DETERMINATION – PLAINTIFF’S CLAIMS AS DETERMINANT

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“The Courts have held that it is the case of the plaintiff as endorsed on the writ of summons and elaborated in the statement of claim or any other originating process that determines the jurisdiction of the Court.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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STATEMENT OF CLAIM INTERPRETATION – TOTALITY OF PLEADINGS

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“And that in determining the case made by a plaintiff, a Court must read all the paragraphs of the statement of claim together to get a flowing story of the plaintiff and not a few paragraphs in isolation and it is the totality of the pleadings that states the case of a party.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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JURISDICTIONAL DETERMINATION – PROHIBITION AGAINST READING FACTS INTO PLEADINGS

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“The Court must not read facts into the statement of claim not contained therein and/or take into considerations issues not arising there from in considering the case of such plaintiff.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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THIRD PARTY NOTICE EFFECT – NON-PARTY TO MAIN ACTION

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“The mere service of a third party notice does not make the person on whom it is served a defendant to the main action but makes him only a defendant vis-a-vis the person serving the notice. In the main action the rights of the plaintiff and the defendant are determined without reference to the defendant’s claim against the third party, but when those rights have been ascertained, it is then open to the person brought in as a third party to have all relevant disputes determined between him and the person serving the notice.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C. (quoting Fatai-Williams, JSC)

 

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JURISDICTIONAL DETERMINATION – DEFENCE IRRELEVANCE

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“First of all, the position of the law is well settled that it is the claim of the Plaintiff that determines the jurisdiction of the Court and not the defence put forward by the Defendant in the statement of defence.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C. (quoting Okoro, JSC)

 

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JURISDICTION AS MATTER OF LAW – STRICT STATUTORY COMPLIANCE

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“The above said, it is trite that jurisdiction of a Court is a hard matter of law that can only be determined in the light of the enabling statute. A Court of law cannot add to or subtract from the provisions of a statute. As a matter of law, a Court must blindly follow and apply the jurisdictional limits and limitations as contained or provided in a statute.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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FEDERAL HIGH COURT JURISDICTION – BANKING MATTERS GENERAL RULE

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“The position of the Court is that as a general rule, Federal High Court possesses exclusive jurisdiction in matters that have to do with banking, banks and other financial institutions, including any action between one bank and another, any action or against the Central Bank of Nigeria arising from banking, save that where the action is between an individual customer and his bank, both the State High Court and the Federal High Court have concurrent jurisdiction to entertain same.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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PROVISO OPERATION – LIMITED QUALIFICATION OF MAIN PROVISION

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“As a general rule, a proviso has a limited operation in qualifying the ambit of the section to which it is related… Therefore, the proper view of the proviso in Section 251(1)(d) of the 1999 Constitution is that the main provision having used the language of exclusive jurisdiction, the proviso then relaxes that exclusiveness given to the Federal High Court therein in a situation in which the issue is a dispute between an individual customer and his bank in respect of transactions between the individual and the bank.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C. (quoting Uwaifo, JSC)

 

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BANKER-CUSTOMER RELATIONSHIP – NATURE OF TRANSACTION DETERMINANT

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“A bank is an individual legal entity. It can be an individual customer to any other person when not acting as a bank. So it is that it can be an individual customer to a bank in any particular transaction – depending on the type of transaction.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C. (quoting Uwaifo, JCA)

 

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SIMPLE CONTRACT DISPUTES – STATE HIGH COURT JURISDICTION

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“The present position of the law is that where the claim is based on tort or has foundation in tortious liability, the Federal High Court is devoid of jurisdiction to entertain same, and it is the State High Court that possesses the requisite jurisdiction… Similarly, the law is that where an action is based on a simple contract it is the State High Court, and not the Federal High Court, that possesses jurisdiction to entertain claim.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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GUARANTEE BONDS AS SIMPLE CONTRACTS – JURISDICTIONAL IMPLICATIONS

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“Section 251(1) of the 1999 Constitution (as amended) provides a limitation to the general and all-embracing jurisdiction of the State High Court. This is because the items listed under the section can only be determined exclusively by the Federal High Court. The section, however, does not confer jurisdiction on the Federal High Court to entertain claims founded on contract or relating to breach of contract or simple contract as in the instant case.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C. (from Petroleum (Special) Trust Fund case)

 

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CORRECTNESS OF DECISION VERSUS REASONING – APPELLATE COURT FOCUS

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“It is settled law that an appellate Court is always preoccupied with the correctness of the decision appealed against and not whether the reasons given for the decision are correct. In so far as the eventual decision is correct, the reasons given by the lower Court, however flawed they may be, are of no moment.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C.

 

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COUNSEL’S DUTY TO ASSIST COURT – ADEQUATE RESEARCH REQUIREMENT

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“Counsel is obliged to argue his client’s case convincingly and assist the Court with authorities so that it may arrive at the right decision. Furthermore, Counsel should not surprise his opponent by not citing authorities in support of his case but relying on the Court to do his duty of researching for authorities in support of his client’s case. This is never done and should not be encouraged. It shows laziness and arrogance on the part of Counsel.” – Per Habeeb Adewale Olumuyiwa Abiru, J.S.C. (from African Reinsurance Corporation case)

 

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CASES CITED

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STATUTES REFERRED TO

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• Constitution of the Federal Republic of Nigeria, 1999 (as amended)

• Constitution of the Federal Republic of Nigeria, 1979

• Section 251(1)(d) of the 1999 Constitution

• Section 230(1)(d) of the 1979 Constitution

• Banks and Other Financial Institutions Act 1991

• Decree 107 of 1993

 

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